A mysterious Renaissance portrait that has hung in an Australian art gallery for 43 years - its artist and subject unknown - has been identified as potentially the world's only painting of the infamous Lucrezia Borgia.

"What was previously a portrait of an unknown sitter by an unidentified artist now seems likely to be one of the most significant portraits surviving from the Renaissance, by one of the great northern Italian painters, Dosso Dossi," said Gerard Vaughan, director of the National Gallery of Victoria in Melbourne.

The oval painting, titled Portrait of a Youth, was purchased in London by the gallery in 1965 for £8,000. If it is proved to be a portrait of Borgia, it could be worth millions.

The man behind the discovery, Carl Villis, conservator of the National Gallery of Victoria, said the revelation follows three years of painstaking detective work, spanning three continents.

"If you had told me two years ago that this painting would be the only known portrait of the most famous and notorious woman in Renaissance history I probably would have shown you the door.

"It seemed so preposterous at first that I was almost too embarrassed to suggest it," said Villis.

Lucrezia Borgia was the illegitimate daughter of Cardinal Rodrigo Borgia, who ruled as Pope Alexander VI from 1492 to 1503 and whose family became known for corruption and scandal. There are other portraits that have been said to be of Lucrezia Borgia, but none has been accepted by scholars.

Villis said he had been intrigued by the portrait since laying eyes on it 18 years ago.

Indeed, the identity of the artist and his subject - originally thought to be a young male - baffled historians and art critics for more than four decades. But following what he describes as "patient detective work", including scientific analysis and meticulous research in Italy, Australia and the US, Villis is certain it could only be of Lucrezia Borgia, painted by Dosso Dossi, a contemporary of Michelangelo and Raphael.

One clue to the subject of the portrait was the dagger held by the figure, which although unheard of in Renaissance portraits of women, symbolised the Roman heroine Lucrezia, renowned for plunging a dagger into her chest after being raped by the son of the king of Rome.

There was also the myrtle bush, highly symbolic in Renaissance painting, which refers to the goddess Venus and indicated the figure was a woman, not a man as originally thought.

"When I started to examine the painting closely and we understood where this was heading I kept quiet about it for quite a while because I just thought it could not possibly be," said Villis.

He said another clue was the similarity between the portrait and a bronze portrait medal of Borgia, made in 1502, which was the only reliable likeness of her features.

The gallery, which will put the portrait on display from Wednesday, expects its conclusion to be heavily scrutinised.

A year ago, it was embarrassed by the revelation that its only work by the legendary impressionist Vincent Van Gogh was a fake.

"We'll put it out now for scholarly debate. I'm convinced that the arguments we are putting forward are valid. Many people are in agreement, some people are not," said Villis.